tv Nightly Business Report PBS April 25, 2015 1:00am-1:31am PDT
this is "nightly business repo with tyler mathisen and sue herera. historic close. the s&p 500 managing to eek out a record along with the nasdaq. and despite the concerns in the market are more gains likely? walk ago way, comcast drops the $45 billion bid for time warner cable but does this collapse open the doors for others. big gains, our market monitor has stocks that he said will increase 20% or more by the end of the year. all of that and more tonight on "nightly business report" for friday april 24th. good evening, everyone. and welcome. i'm sue herera. tyler mathisen is off tonight. well stocks finish the week at records. the s&p 500 climbing just enough to close at the highest level
ever. and for the nasdaq it was the second record close in a row. the dow jones next was 21 poipds to 18,080. the nasdaq climbs 36 to 5092 and the s&p gains five points to 2117.69. for the week the major indices were higher with the best five-day run since late october. so despite the groans from traders there is no volume valuations are high and the economic data isn't as strong as it should be there are some things working in the market's favor. bob pis annie has more. >> the standouts were again on the nasdaq with three big seattle companies reporting earnings. microsoft was up over 10%. wlou! amazon was up 14%. that is a historic high. and starbucks was up. also a historic high. and earnings while weak aren't
as bad as many are feared. the flat earnings are blamed on the weather and the collapse in oil and the strong dollar. but oil is moving up. the dollar stopped rallying so these excuses won't hold much water in the current kwaernt. and the rally is accompanied by low volume and volatility and while that is true but there is no alternative to stocks not in cash and bonds. real estate is an alternative investment but a high cost one. for "nightly business report," i'm bob pis anie at the new york stom exchange. and now to the begga deal that didn't happen. last night we reported that comcast was close to abandoning the $45 billion bid for time warner cable. the deal announced 14 months ago came underin continuance scrutiny from regulators concerned they would control too much broadband. shares of comcast rose and time
warner cable popped 4%. so what caused the merger to un why did the collapse of this deal set off a new round of deal chatter? >> it started as a $45 billion cable merger but the deal died because of the internet's growing role as a gateway to information and entertainment. neither company is owed a break-up fee but comcast said it spent more than $230 million last year trying to win government backing for the deal. that was enough according to comcast chairman and ceo ryan roberts. >> we thought we could get the deal approved we thought we could make a good case. i think our team did. but in the end, we have to move on. >> unwilling to battle federal regulators the two companies walked away from a deal that would have given comcast control of more than half of the nation's 87 million broadband customers, 30% of the tv market
and including nbc universal. the fcc applauded the deal's demise saying, the decision, quote, is in the best interest of consumers and the merger would have been a risk to competition and innovation. the department of justice said it is a victory for providers of streaming content and services. >> there are no gatekeepers for deciding what you get to access or toll roads on the information superhighway. >> it may have been deemed after the white house backed the concept of net neutrality last fall it. met trouble for the netflix decision to pay comcast for faster service which illustrated the power broadband companies could have over content providers. >> one key mistake and that was not giving into netflix. nobody knew why internet -- why you should worry about an open noibt. things could have been different if they handled that in a less aggressive manner. >> comcast, for one, has a lot of cash left to redeploy.
one analyst thinks a foray into wireless communications could make sense. >> they are not just going to sit around. the world is moving fast. my partner has talked about t-mobile or sprint acquisition could make sense. the key device in every person's life now is a mobile phone. >> the end of the deal also means charter communications a regional cable operator will not acquire some of the time warner cable comcast had agreed to depart with. and another dependent on the merger charter's acquisition of brighthouse networks the country's sixth largest cable tv operator. it is also off. but there could be other deals in the works: and charter communications backed by bill air john malone may make a bid to by twc. time warner cable announces earnings next week when bhor details could be announced. oneun of eric holders last acts as attorney general was to authorize a lawsuit against the
deal. we are joined from washington with more on the anti-trait environment. so what was the main reason the government didn't like this particular deal? >> well i talked to a department of justice official today sue, who said that ultimately it wasn't about the cable television business but the comcast folks made the argument that the comcast and time warner didn't overlap or anti-competitive but they were looking at the broad band penen and an official saying this would let comcast control 60% of the broadband and the department of justice thought that was simply too much sue. >> so given what happened today, what lessons should other companies take from the comcast failure? >> well clearly what the department of justice is signaling here is no deal is too big to be scrutinized. the department of justice official that i talked to today said the lesson for other companies shoue e will get down into the weeds of these deals and proposals and go through the documents for as
long as it takes. and i'm told this deal though there is speculation in the past week here of what the fate is i'm told now that this deal has been effectively dead for a number of weeks because eric holder made that decision to block the deal based on the staff recommendation a couple of weeks ago, according to a d.o.j. source this morning, sue. >> given the fact a deal of this size was scrapped to your point, how much of a chilling effect do you think this will have? >> that is the question. how much self-censorship will be on the part of companies looking at opportunities in the mergers and acquisition space. and you can imagine this sends a big message to anybody who is consid doing a broadband acquisition of any significant size in this country. they have to get over that hurdle of how much control does any one company have over internet access in this country. that is clearly what the government is concerned about here and that is the argument that any future deal will have to get over. >> a man javers in washington.
comcast is the parent company of cnbc which produces this program. and there was drama in the drug era. periggo rejected a deal from mylan. that is the second dismissal this week. but mylan doesn't just want to acquire periggo, it also wanted to fendoff a take over attempt by teva. the latest offer under values the company. and periggo dropped 4% and teva added nearly 2%. to the u.s. economy now where march durable good orders for big key ticket itemsupped 4% the largest increase in eight months but the rise was driven almost entirely by higher demand for defense, auto and aircraft orders: and an important measure of future investment fell 5%. more than estimates. the seventh straight monthly decline. and that decline in business investment prompted a number of
economists to trim forecast for firs growth which the government is due to report last week and that is the most widely followed measure of econoc health. but a comprehensive look at first quarter data over the past 30 years conducted by steve liesman shows there may be a big problem with the numbers. a trend that some economists have confirmed. >> the latest tracking data show another weak first quarter on tap. as low as 1% given what we know so far. will it be a coincidence it is another weak first quarter? cnbc went back to 1985 and did a detailed review of gross domestic data and the most growth in the united states. we found what looks to be a substantial and persistent problem in the data. we thought average first quarter gdp compared over all in the 30-year period six of the ten worst quarters since 1985 were
first quarter. and since 2010, first quarter looks like another economy altogether averaging 0.62% versus 2.3% over ts what the average is for all four quarters of growth. you can see the first quarter lags substantially and the second quarter picks up some of the growth but not all of it. >> it is not a question of what has happened the last four years. the most compelling part is q1 has looked different than the other quarters over the past i would say 25, 30 years. that is not something seasonal adjustment should do. so there is a real puzzle. so i hope folks will dig in and figure out why. >> the beu published the gdp and they are looking into residual seasonality or the possibility they may not be adequately adjusting the data for regular patterns. the cnbc analysis shows the q1 effect holds whether the economy is in expansion or recession.
e potential for the q1 data right now is significant. fed officials are considering rate hikes and some have suggested the recent q1 weakness gives them pause. investors are faced with the issue of whether the economy is really weakening or should they be banking on a second quarter rebound. for "nightly business report," bum steve liesman. still ahead, why our market monitor guest is a big bull on apple ahead of its earnings' reports due out on monday. the first apple watches made their way to customers today. and while many may look at device as a consumer product,
businesses see it as something that could change the workplace. josh lipton has more. >> there will be apple watch sport starts at $349. >> the sarah palin ceo tim cook hasade a strong pitch for the company's new watch. em facizing the quality, precision of the timepiece but the success will depend on the apple beep bench of developers who need to design engaging apps. already there are more than 3000 apps available for the watch. right now most of the attention is focused on apps for consumers. things like uber make sense, you want to request a driver and get back to whatever you were doing. yelp is another good example of an app coming out where you want to see what is around you and get a recommendation of where to eat. >> but it isn't just consumers.
companies are also betting that the apple watch can play a big role in the workplace. the idea is business apps could help professionals work more efficiently and stay better informed. >> you are a sales manager and you get a quick notification you are aboic to use a deal on price, and that is something you want to react about a deal in five minutes. and if you are away from your iphone or computer you could lose a deal that way. >> a quick check on treasuries. >> and tech giants are taking notice. sales fos designed an app to get realtime alerts and view dashboards an even the apple rivals are getting involved. microsoft designs an app to allow users to control powerpoint slideshows on their iphone. and there are challenges with using the apple watch in the workplace. the most obvious, over loading workers with too many notifications. companies need to figure out which notifications are reportant enough to send to somebody's wrist.
otherwise, they might just be distracted or annoyed by the watch. but workers seem open to the idea of using a smart watch in the office. of those who plan to buy the apple watch, more than 90% want to use the device for work functions, according to a new poll conducted by miebl iron a mobile software company. for "nightly business report," i'm josh lipton in san francisco. and now to our market monitor who said apple is a good investment ahead of earnings on money. he also recommended that stock back in december and said apple along with disney and taser would increase 20% in the first half of this year. and as can you see, so far, his picks have seen some pretty decent doue e-digit gain. ez ross gerber ceo and president of his own management company. welcome back. nice to have you here. >> thanks. nice to be back. >> let's start with apple. you say it is a good investment ahead of earnings. and we just profile the apple
watch. does that factor into your bullish view? >> absolutely. i spent an hour with the watch yester its an incredible product. so much better than the expectations. they are completely sold out across the world and this will continue to be the most sought after item probably all the way through christmas. so apple has great things going on in every division they are hitting on all cylinders and this is an absolutely must for your portfolio. so we are extremely excited. >> and your price tagt is between $15 to $160 billion by the end of the year and so that is an upside. >> and it could go higher. it is trading at a discount multiple to the market. what else can you ask for in a company? it has a great position. so it has a lot of potential upside. >> let's move on to imax one of your picks. what will drive things on imax? because in the past it was inconsistent. that has changed however. but why are you bullish on it?
>> i match has had an inconsistent history because they rely soly on the product of the entertainment industry that it gives them. so as a theater owner, if the movies are that good it hurts the revenue and profits and we've seen decent movies and lower rates. it will be a record year for movies but it ends with star wars. imax has the theaters bood up all of them for star wars from december through january. this is the biggest movie of all-time. you have to play the star wars trade. this is a great way to do it. >> well may the force be with the stock. you think it will be going about -- about 50 by the end of the year. >> i think it has considerable upside. they can leverage their global brand as well as the facts that they get a cut of revenue for every ticket that is being sold. so they have a sort of unlimited
upside and fixed cost. so their margins will increase and that is great for them. >> and tesla is the last target price of $260 toward the end of the year. do you view it as a tech company or a consumer products company or a car maker. what do you look at it as. >> i look at it as a technology company that makes cars. at the end of the month they will announce they are making batteries. they are pivoting to a battery company and the development of the technology is revolutionary. we cannot tell you how important it is to upgrade the storage of energy and that is what tesla has mastered with the car. and as they expand into this home power business and consumer power business it creates an enormous upside for them in the battery business. so we're bullish on tesla because the model x is a beautiful car and comes out toward the e of year and that will increase the demand for tesla and we do think they'll hit their target.
>> ross we'll leave it there. thank you so much for joining us. >> my pleasure. have a good weekend. >> ross gerber. shares tumble and we begin tonight's focus. the company cut the 2015 profit forecast blaming, what else the strong dollar. and it reported quarterly revenue that missed estimates. sales were mostly hurt by lower demand for prisoners and because of higher costs. shares fell 9% to $11.99. fio jenno tech slowing the key multiple sclerosis weighed on the results and the company reported lower than expected profit and revenue. shares fell 7% to $401.74. american airlines went the other way after they reported the first quarter profit number nearly doubled. this is the company that continues to benefit from low jet fuel prices. but despite the beat the strong dollar and competitive capacity
and softness in latin america pulled down sales. and the company declared a 10 ¢ dividend. shares rose to $52.71. kellogg declaring a dividend of 49 cents a share it. will be made in june and will tike the dividend 2% starting in the third quarter. the yield on the dividend is right around 3%. shares meantime were off a fraction and finished the trading session at $53.73. andary pharmaceutical lost more than half of the value. this is the lead experimental drug failed in a late stage study. the stock was off 63% or $22 to $12.87. coca-cola still has a lot of work ahead of it if it wants to turn business around. and as we told you this week when the dow component reports earnings investors are starting to feel optimistic about the company's future. today sara eisen spoke to coke
executives including the ceo muttar kent about where the largest beverage company sees the groeblg. she has more from headquarters in atlanta. >> the answer to slump in sales. bet big on small packages. >> you see feet and feet of mini cans. the mini can business is exploding. it is driven by portions and waste. >> in the next 10-15 years, sara beverage brands in the world will be built and enhanced in three ways. one is ready to drink, continuing to be impacted just like this -- packages just like this. and the second at home through technology like carry cold ane the pods. and the third is technology enhances at food service like freestyle. >> in other words, the coke
growth of soda is in smaller bottles and cans and they are sticking with diet coke and see growths outside of the u.s. despite plunging popularity at home. and they are announcing they are taking aspartame out of diet pepsi and using splenda instead. >> aspartame is the most contested ingredient in our beverages. we have 200 studies by numerous regulatory bodies and we make sure that the education and the awareness is out there and reinforcing to consumers that it is perfectly safe to drink. >> and coke is investing in the drink brands growing. the fastest one -- >> tea, gold pt and smart water. all three are growing fast. >> and still this is a company with 70% of the sales coming from soda. unlike pepsi which only gets 25% of the business from drinks and the last from salty snacks under the frito lay brand. instead of diversifying into food and another business the
129-year-old beverage giant said the growth will come from the company goes back to the roots. for "nightly business report," i'm sara eisen in atlanta. coming up the housing market's biggest challenge is a lack of listings and a new report shows the shortage of inventory may actually be worse than it seems. that story, next. here is a look at what to watch next week. earnings are do you from dow components apple, pfizer and exxon-mobil. a two day policy meeting and more housing data due out with
the first read on first quarter economic growth and that is what is on the agenda next week. ford recalling about 390,000 cars. the automaker said the door latch may not work properly and could open while the car is moving. the recalls include ford fiesta fusions and the lincoln mkz cars from 2012 to 2014. you know buying a home is a big financial decision. probably the financial decision of a lifetime. for many it is the single largest investment they'll ever make. but potential buyers are facing a major obstacle a lack of listings. even in the middle of the busy spring market. and now a new report shows supply may be even tighter than we think. diana olick reports. >> it looks like an easy sell. newly renovated on a corner lot in a highly sought-after washington, d.c. neighborhood. >> they said it was -- they said don't worry about it. this will sit. -- sell.
but it has been sitting. >> it has been on the market since late february. even with supply down 24% from a year ago and demand very strong. this house is now what realtors call stale. that is unsold for more than 30 days. and in fact nearly three quarters of the homes listed today nationally are stale. that is according to real estate brokerage red fin. in some markets like charlotte, it is far worse. 95% of the market is stale. >> if the house doesn't sell in the first few weeks, sometimes it doesn't sell in the first few months and it sits on the market and that means that the inventory crisis that everyone is talking about is actually much worse than people realize because there is a small segment of real estate that people are actually willing to buy. >> but homes are actually going stale faster than ever today. why? because of this. information. ump s that give every potential buyer to find every last detail about every house and every comp and every block
of every neighborhood so they know literally in seconds if a house is a good buy. >> so you do have the new american home buyer that is nerdy and data driven and the new buyer knows more than her algt. >> and today's buyers are not only nerdy, but nervous. >> nobody knows what will happen. sometimes they tell the market will crash tomorrow and they don't know. the interest rate will go high. so people are scared. >> so even though we saw a slight bump in inventory nationally from february to march, with realtors saying there are 2 million active listings the actual number of desirable, buyable homes, may be far less. for "nightly business report," i'm diana olhi more about how stale homes are hurting the spring market head to our website, nbr.com. and boxing's biggest fight will go down and ticket prices
are a knockout. the may weatherer pacquiao fight were sold out in seconds and meaning people went hesitant to dish out. the average ticket is 11,000 dollars according to seller ticket iq higher than the super bowl with some goes up wars of 1 -- upwards of 100,000 dollars, on track to hold the h price of any sporting event in u. history. and that for tonight. i'm sue herera. thanks for watching everybody. we'll see you monday.
gwen: the clinton cash machine, a confirmed attorney general and parsing mixed messages it from iran. all tonight on "washington week." president obama: it's a cruel and bitter truth in the fog of war generally and our fight against terrorists specifically, mistakes sometimes deadly mistakes can occur. gwen: a tragic intelligence mistake kills americans on both sides of the anti-terrorism war and raises questions about whether to go from here. >> it's my opinion that we need to do more pt we should have done more and we should do more for all of these hostages. this is a complicated business. gwen: in the 2015 campaign trail, the